>> come prepared. come ready to play. >> more coffee next time. >> so to speak. >> you look beautiful. >> you do. you're definitely as hot as we thought. >> thank you, becky. >> as hot as we thought. >> i was thinking she was glowing, beautiful necklace, hair looks perfect. thank you, jane. >> join us tomorrow. right now it's time for "squawk on the street." good wednesday morningp. welcome to "squawk on the street." i'm carl kinquintanilla with ji cramer and david faber. can the s&p go higher seven days in a row? futures suggest it might be a contest. awash in earnings. apple and facebook tonight. watch housing today. new home sales after existing home sales fell to the lowest in 2012p. europe in the red despite the strongest flash pmi in 35

months. our road map results with boeing, more planes delivered while cost cutting is paying off. >> a tale of two markets. u.s. results disappoint. weather had an impact. what about the waffle taco? >> gilead beats, amgen dropping after the steep sell-off in biotech stocks, is the worst over or just beginning? >> is it legal? it is. is it front running some we're going to hear from bill ackman on his host still takeover tactic teaming up with valeant to bid for allergan. exclusive comment from activist carl icahn. >> lot of numbers. boeing reporting earnings $1.76 did beat estimates helped by an improvement in profit margins but when raising their full year earnings guidance and procter & gamble reporting a quarterly earnings beat slight revenue miss. the cfo on "squawk box" this morning. >> global growth in our product

categories is about 3%. we maintain mark share in the quarter we had and consumers around the world remain very responsive to value creative innovation like laundry products, like some of the new razor products, et cetera. >> all right. let's tackle boeing first. commercial airplane margins up, raised on tax benefits they see later in the year. >> boeing is a living breathing example of how wrong much of wall street can be. lots of talk this was going to be a bad quarter, maybe the worst quarter of the year. mcnerney speaks softly, not a promotional guy, but the deliveries here, the orders here, the backlog here, $440 billion including $19 billion of net orders during the quarter. boeing is going -- my travel trust owns it, going much higher. boeing going back to where it was before it -- the swoon. >> the dreamliner. >> the same way united it technologies goes up a lot and

hu honeywell. look at delta's number. aerospace the strongest part of the world economy. we heard that from alcoa. the boeing quarter, mcnerney delivers. the man has got a 20-year plan. people periodically don't breev in him, the swoon occurs and it comes back. airline are flush. delta delivers a number despite huge cancellations. the airlines are flush worldwide. what do they do when they have money? they buy a boeing plane. >> delta did beat by 4 cents, canceled 17,000 flights in the quarter, $90 million in lost revenue and load factor was up, up 3.2. >> for the first time when on those planes and they're filled. so many people have said my plane is filled i have to buy the stock. now the planes are filled, buy the stock. a lot of people worried delta was going to have to glide down because of the cancellations.

imagine what number they could have put on without the cancellations and then i'll tell you that's the number they're going to do this quarter. stock goes much higher. >> you've been positive on all these groups, those that provide the airplanes and those that fly them for some time and rightly so. >> thank you. >> boeing i think $1.1 billion in operating cash flow, bought back another 19.5 million shares. >> right. >> for about $2.5 billion. that's just one quarter. they still have $8.3 billion remaining under their current repurchase. of course, that's a $10 billion a year rate -- run rate there. i don't know if they'll fulfill that or not. >> they will do a big dividend boost. >> right. >> some of these companies, remember this is the leader in the dow last year. >> yes. >> it has languished. others have caught up. you're looking at companies, go over the end industrials. united technologies better than expected, honeywell, inger sol rand not better. but extremely better than expected. emerson orders this morning, trailing orders 10%. only company in the industrial sector that did not deliver was

lockheed martin. >> we know what the pentagon is doing. >> and frankly australia put in a big order last night for planes. our allies will have to start ponying up and that's what lockheed martin is about. >> let's do p&g. beat business 3 cents. volume up 3. not quite what kimberly did. beauty flat, baby is flat. if it hadn't been for fabric and health care might have been tougher. >> my trust owns this. disappointing frankly. i expected more from proctor. kimberly quarter was -- at least they're giving you split off. proctor will not do anything. it has a good yield. kimberly probably not going much lower. these are companies that are expensive. valued at 17 times earnings. general mills up 19 if you want to go food. these are valued at expensive prices because interest rate don't go higher. is there anything -- i mean my trust looked at this. i said, you know. >> right. >> eh. >> 3.2% yield stuff. >> i love that.

thank you. mcdonald's. >> better than a ten-year. >> yes. some of us say the other day, they can't make as much in their savings account, make more in their savings account. my savings account pays me 0.25. i think i pay them. i think i'm paying jpmorgan a tremendous amount of money to keep my account there, when we add in the fees. but they do a good job. and they hire a lot of lawyers and regulation so they have to. they can't afford to pay me a lot because of how many lawyers they have to pay. >> 7,000. >> maybe more. >> only fair. >> but proctor is part of this problem of like do i really want to own value? we'll hear from coca-cola and warren buffet tomorrow with becky, or own blowout orders like united technology and boeing. i want to own the latter. >> last night yum brands reported better than expected first quarter earnings of 87 cents. comps up 9 in china as the company recovers from the food safety concerns in its biggest market. yum sales in the u.s., kfc, taco

be bell, pizza hut, down in the quarter by let's see, three for kfc, five for pizza, one for taco bell. some of the pressures that mcdonald's is facing is clearly bleeding over to competitors? >> i got to tell you, i don't want to switch venues here. this is a china story. the china margins were great. china term is real. david novak, the ceo, does a great job. one of the things i do not like and expressed this to the company over and over again, don't give us the quarter at night and give us the conference call right now. there are analysts skittish going into the quarter about china. i was not impressed with the u.s. i will go and have the taco waffle this weekend. but i will fast friday. i will take lipitor friday evening and follow up with avapro. that way i'm sure i will be protected from what that waffle -- >> that cocktail. >> yeah. >> to combat the effects of the taco waffle. >> i don't have to take thank heavens the gilead pill.

>> that's a terrible disease that is being solved by a pill and questions about that. >> questions about how much you should pay for that pill. can you help me on that? >> i may be able to. >> gilead, 1.49, the help c drug the center of all that pricing controversy, $2 billion in sales. the estimate was just over $1 billion. they crushed that number. >> this is one of those where a lot of wow factors,p the analysts follow it up with isn't the drug going to be better. wow. wasn't a lot of -- wasn't there a lot of inventory stocking. wow, but will the insurance companies really pay for it? you came through this quarter and said i know -- i'm going to say something -- try to be as sensitive as possible. gilead's pill cures and what people like is maintenance. like they like biogen's ms drug because it maintains, doesn't cure. this drug after 12 weeks you might be done with it. after 8 weeks you might be done with it. the population is big.

there was a terrific article in market watch that said look, if everybody who had to take this drug takes it it's $330 billion in sales. but it's -- might be one time only. >> and then done and then all of the side effects and all the other add-on effects of having help c, getting cirrhosis down the line, diabetes, all the things that conceivably accrue as a result of this disease, no longer happen. >> yes. >> and so you may be saving the health care system money. >> that's the issue. >> $84,000 a year price tag is a big number why people go whoa. wait a while. >> they have standard of care in the conference call and the standard of care is not -- it's not that much cheaper when you consider all the complications you just cirrhosis, diabetes. this is the crux. gilead will be the crux of the health care in our country. this is the debate over the next 18 months. >> the president may have to weigh in. >> it's a cure and that is a very different thing than, for example, lipitor which you and i will be taking for the remainder of our lives. >> true.

>> because it's actually treating something that we may not even have. >> how interesting was it, that the lipitor launch in 2006 was compared on the gilead conference call but lipitor is a maintenance drug. when it goes off patent, boom. a lot are saying wait until mercks comes in and then express zips trying to put together groups to push the price of this drug down. you can understand when gilead numbers comes out the stock goes up five, then comes in as people recognize wait a second, holes in the story, but it becomes a value stock. in the conference call they say our stock is kind of ridiculously undervalued. we're going to be buying back hand over fist. >> stock down 11% in three months. amgen not as good. biogen did miss. does money come back to these names the way it left in the last couple of weeks? >> i think if you a cessation of new deals, ipos it can come back. the gilead quarter, i mean you're going to hear all day whispers about how there is a substantial amount of inventory

in the system. even though the company clarified only 50% of the doctors that can prescribe it are doing it, these are battlegrounds. boeing is not a battleground. these are battlegrounds. software as a service, is a battleground. we could get to what einhorn was talking about, high flying techs he was short didn't make a lot of money. >> in his letter that came out yesterday. >> but the battlegrounds will remain battlegrounds given the fact gilead is not up ten points today. not up ten. it would be up ten if it weren't a battleground. >> all right. we still got to get through dow chemical and at&t and a bunch of names. >> at&t battleground. holy cow. >> that's kind of interesting. >> we'll talk about at&t. >> yeah. >> when we come back, hear what carl icahn thinks about bill ackman teaming with valeant and that bid for allergan. find out what he told david faber after the break. take one more look at futures. transports did make a new closing high. the industrials need 62 points to confirm it for all you dow theorists. lot more "squawk on the street" from post nine in a moment. in . i've always kept my eye on her...

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just got an agreement announcement between amazon and hbo. becomes the exclusive on-line subscription home for certain hbo shows like "the sopranos" and "six feet under." the key here, they will not -- they will not be available on services like netflix and apple tv. netflix shares moving lower in the premarket by about 3%.

things is a victory for amazon one would argue. >> if you want to watch an hbo show on netflix you had to get the disk. haven't been able to stream their old shows. you could go to hbo on demand and watch. as fans of "the wire" which i will state having gone through four seasons of about the "breaking bad" was bet sfoer season five of "wire" was weak, david. >> people can sample on amazon. interesting they chose to go the amazon route. it's older shows. not new stuff. you won't get "game of thrones" last week". >> got viacom properties when dora migrated, little by little. bezos chipping away. >> true but didn't he say -- >> exactly. >> talked about that yesterday. >> virtual rain forest. >> echo system. >> you want amazon prime, us, you want a number of different offerings and then you can pull out your cable.

>> don't you want cbs and abc? >> you can put up your rabbit ears given what the apparently how the supreme court -- >> wow. >> argument went yesterday. >> television. >> you want to put on your rabbit ears. >> justice scalia needs not to get out more but go home more. >> how about roberts is brilliant. i love the quote. your technological model based on circumventing legal prohibitions you don't want to comply with. my prediction here, roberts prevails. he's a really smart guy. >> he is writing the decision. >> great guy. >> arguments yesterday we will not get the decision from the supreme court until i believe it's june usually when -- >> i'm giving it to you now. >> let's move on -- >> can we get them like roccrow roku. >>. >> we're watching shares of

allergan this morning. they were up sharply yesterday when we received the word that investor bill ackman with along importantly valeant pharmaceutical teaming up to make a bid for the maker of botox. earlier on "squawk box" ackman explained -- remember this is very interesting in terms of his acquisition of the stock, largely through options which are convertble to about 9.7% stake, taking place prior to any of these offers. why is ta not front running? >> the way the rules work you're actually permitted to trade on inside information as long as you didn't receive the information from someone who has breached the fiduciary duty. we teamed up with valeant. valeant came to us and said look, you can help us acquire allergan we would like to work with you. we said great, we formed a partnership and partnership has various terms, gives us the right and the permission from the company to go buy a stake in allergan. >> it is absolutely legal. i said that many number of times

yesterday. the benefit that is being given to valeant which could have acted alone but chose not to, he helps legitimize their currency, for example, ackman. he's very good at fighting. we know that. he was able to put up 3 plus billion dollars in ka tall which they're a highly levered company would not have been easy for them to part with. you can make that argument. still doesn't feel quite right to a lot of people who look at it and say yeah, but he's able to buy and he knows the stock is going to go up and eventually he will be selling. he will hold $1.5 billion in valeant, become a significant shareholder in what may be the combination, more on allergan and its ability to fight this off later. >> how do you lose if you're ackman. someone is going to make a bid, put allergan in play, you're going to win either way. >> virtually risk-free with robert cue zam my as your lawyer. >> don't you love that. resigns january 2013 and blessing it. the sec will not go against it.

might go after people who they think had knowledge of the option buys. ten-day window. right. >> ten-day window. they had a buy furiously and they were doing an options but you saw the movement in the stock as well. the stock price $116 a share because you need to -- those who are selling in the options need to dealt the hedge. i spoke with carl icahn still the king of all activists and has double the size of money that most of them have out there at this point. it was an exclusive interview that we taped after the active passive summit. icahn has been critical of bill ackman in the past, you know that, on opposite sides of herbal life. he had a somewhat surprising take at least on this latest move. >> with all the stuff i've said with ackman, back and forth, back and forth, i think he's dead wrong about herbal life. >> right. >> and we have our differences, but i never said he's not a smart guy. >> right. >> and i think the concept of

this is good. hope it works out better than herbal life did and i think will. that doesn't mean is something wrong with that? what's wrong with making a bid for a company and using somebody's funds? what's the difference whose funds it is? >> of course i asked mr. icahn, hey, could you see doing it at some point? he said sure, why not. >> what the heck. >> and then raises the question as to private equity firms, talking about this on "squawk box," could they conceivably. this was a very -- it may not be something that is copied, but it is a very important milestone in the maturation of activism, i believe, and what it means for hostile bids swri been so far and few between because they never work. >> right. >> the case that should be make made speaking as someone who went to law school and talked to the sec a lot, the case that should be made against this is by the guy who sold ackman the calls. because that guy would say, listen, i was selling and this guy had inside information.

now, we all know that that's not -- that that's not necessarily -- >> not going to make a case. >> but they will. >> they'll try. >> they'll try. but they will run into -- >> it's not insider -- you're acting on your own information. he wasn't giving it to somebody else. >> that's what happens. they're going to say the guy knew, the sec is going to find against those guys, they're going to try it. >> you're saying the model can't survive? >> i think that -- >> well the difference -- >> i would never want to sell a call to a hedge fund -- >> if valeant had done it on their own nobody would be looking at it. >> it's totally legal. that's what i predict. as a guy who sold calls is going to say wait a second, this guy knew and i didn't. >> right. >> that's the simplistic reasoning but what happens. >> ackman says he's gotten calls from other companies with other targets. >> a lot of deals done. this is exciting. you got a lot ahead of you. >> we do. >> lot of deals this year good for investment banks and hedge funds. >> already on track for a trillion dollars. >> good for everybody. >> tax inversions aplenty.

>> we should reincorporate maybe in the netherlands. >> go back in the hedge fund games. >> could "squawk on the street." >> luxembourg. small. we could be big there. >> have someone there? we'll put a guy there. >> when we come back we'll get cramer's mad dash and count down to the opening bell and take one more look at the premarket. "squawk on the street" is back in a minute. [ male announcer ] this is the age of knowing what you're made of. why let erectile dysfunction get in your way? talk to your doctor about viagra. ask if your heart is healthy enough for sex. do not take viagra if you take nitrates for chest pain.

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viagra home delivery. i hate when my computer gets grouchy. it's probably due to lack of sleep. set your computers to hibernate after 30 minutes. the rest will do it some good, and save energy. the more you know. ♪ all right. mad dash for this wednesday. 5:30 to the opening bell. so many things to cover. i know you want to talk sky works. >> normally this wouldn't be

important but the stock up 10% today. david aldrich the ceo, reinvented sky works not just a cell phone company but as a company involved with connectivity in all places. medtronics, heart, auto, health care, and the reason i think it's important because people are going to take their cue from this for apple tonight. be careful. apple is cell phone primarily, smartphone. that's going to be the driver. sky works has moved from smartphone and tablet. arm holdings last night which is much more apple related disappointed. this what is people are going to take their cue from. this is why apple could be down in trading today. >> skyworks should not be a read on some of that into that framework. >> what aldrich did was say i have to be in connectivity. you will hear that term more and more. skyworks is an internet of all things play. i'm impressed with the way aldrich, dividend, buyback, but not just cell phone and that's what's really important here, david. >> stock up 100% over the last year. >> the guy is -- there's --

they're taking share. if you crack open your cell phone, don't do that, or almost any other device you will see a skyworks. this company has no debt. it is doing everything right. a lot of people are shorting it because they feel it's moved up too much. i think they're going to go out against arm holdings. i listened to arm holdings. they tell a good story but they don't have the growth. >>p apple and facebook coming up after the closing bell. how about the opening bell? just four minutes away. "squawk on the street" is coming right back. right back. tomorrow what will finance look like in 25 years? credit card shopping, banking. how will your money move in a digital future? kayla tausche looks

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after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world on this wednesday. busy day for earnings. apple and facebook and qualcomm tonight. we'll try to preview those later in the morning. for the time being the dow is going to be dragged a little lower by at&t. but boeing is going to open up almost 3%. >> yeah. boeing is going -- like i said boeing is going higher. boeing is part of that cohort of companies where the revenues are really soaring. we used to keep hearing that industrials all done with cuts. it's all done with firings. that's not the case with some of these great industrials anymore. >> sort of echos the action we saw against snap on and rockwall

automation and itw. all close to 52-week highs. >> snap on is an amazing story. a great american technology company just doing terrific things. >> there's the bell and a look at the s&p going for seven in a row up days today. that has not been done since last fall. down here at the big board, portfolio solutions, highlighting the dividend dog seers etfs. at the nasdaq a biopharma company celebrating its 30th listing anniversary. you drew our attention to the dow components. skyworks going to be a 12.5 year high today. >> skyworks did a lot of things right. i think, you know, you mentioned qualcomm. so the question is, is callcom like arm holdings which wase e y disappointing or more like skyworks. i believe it's going to be more like skyworks. they have a huge amount of cash. skyworks is a buyback of its

stock. qualcomm has done it too. qualcomm is tricky. don't trade it off the earnings announcement. it's a conference call stock and wait before the q and a where they give you the guidance, go about a third of the way through the conference call before you know what you're doing. a lot like to pull the trigger beforehand. that's a mistake. >> dow chemicals a winner at the open. beats by 8 cents with 9 cents. higher hydrocarbon costs but 10% drop in r and d. sixth consecutive quarter of year on year profit growth. >> i think they've made a case this company should stay together. delivered the quarter. ppg, which is on "mad money" tonight, they did get rid of the commodity. okay. and dupont is getting rid of the commodity. he's sticking with the commodity. largely a commodity company. but got the seed business, pretty good. >> he's got to produce. it's when load came out with that letter a letter to his fund holders, wasn't a letter to dow. >> good point. >> he missed the deadline

already. doesn't mean it won't come around again. so this is not a story that's going away. >> no. >> and if they don't produce f they don't necessarily create a lot more value, one would expect there might be a bat until its future. >> -- battle in its future. >> one of the things people should know about dow, when you hear about the north american renaissance, i had david la czar on saying it's just heating up, dow is building plants, taking adof vang of it -- advantage of it. this is dow sweet spot. they have taken advantage of our cheap natural gas. impressive. it's impressive. i have been critical of him when he paid too much for roman haas but that's in his past. >> man power up 7%. that's about a three month high. in addition to earnings say they're seeing more positive trends as we enter q2. i don't know if that's a go ahead or bad thing. >> remember, mab pn power is a

french company, gigantic french business. a time we would have spent time on the european business, pmi, but man power being up five, that is france hiring. and no one thinks france is hiring. people just think that europe is awful. man power, diversified away from the united states when it looked like we were going to be sluggish. it's a very good company. is it a tell for anything else tell for worldwide growth. europe i consistency see good news out of europe. we all write off china but if you're listening to united technologies and boeing and obviously right now yum is on, you do not feel like china is going away. you feel very good about china. >> right. >> shares of allergan are up again. very slightly. less than 1%. shares of valeant also up this morning. as you might expect a lot of research coming out on this, gives analysts to do. morgan stanley saying they listened to the presentation

yesterday and valeant targets imply eliminating $1.2 billion of r and d or the vast majority of the research and development. >> that's the -- >> of allergan they estimate $750 million in r and d cuts. the new co-combined with have $300 million in r and d as opposed to what it is now, $1.2 billion in pro forma r and d, represents about 44% of the total operating synergies. there are a lot of synergies including tax synergies they say at morgan stanley, 2.7 billion of operating cost savings. call it $3 billion annually. 3 billion an fully. question is when you come up with that, who is going to be able to compete? what other company conceivably could come in for allergan and top this bid if and when it goes out to see if there is a so-called white knight? very hard to imagine that would be the case. what are other things allergan can do and we'll have time here remember, because they missed the annual meeting. they can act by written consent to call a special meeting but

you need 25%. they've got time at allergan and they will consider their options. another one might be to try to find a tax inversion of their own. that's why shire was up yesterday. >> right. >> jazz was up yesterday. >> that's a great point. >> do you find a tax inversion? try to weather the storm. maybe lever up a little bit, pay a big special dividend? can you do that? do you have to say, okay, guys, give us a bigger number and we're happy to go along with you. >> tremendous irony. piad comes on all the time at "mad money." >> the ceo of allergen. >> and the hallmark of what he says, these other guys, these big drug companies, they're all sales forces. not us. we're an r and d machine. put 16% of our cap capital in r and d. along comes a company which says they do a lot of r and d on squawk this morning, along comes a company that basically says we're going to fire most of your r and d people, stop all that

nonsense and fire people, fire your sales people in derma, won't say -- this is my prediction of what can happen n op that ma logical. a company that has a great r and d shop and a company that elimit eliminates the r and d. >> what does that mean for the long term? what valeant needs to always do is another deal. >> john explained about the long term. >> we're all dead. they need to do another deal. this is that deal for them. what comes next? now he will say a new model, pharmaceutical industry doesn't know what it's doing. >> right. >> it spends way too much on r and d, on products that never see the light of day. we can figure out a better way to do this. >> they spend a lot of money but you have to develop it. that's what's good. do you think there's any chance that carl icahn will team with valeant for a bid for herbal life? >> i would say no.

>> will you ask at the interview. >> didn't occur to me to ask that question. i did ask a few others. we will have icahn's responses on a number of fronts. >> facetious. >> i know. >> let's move to at&t here. >> please. >> and talk about that stock which is down this morning. over almost 4%. >> yeah. >> drum roll please for the faber report. new wireless subscribers helped to boost the revenue there, of course, in terms of they helped to juice up revenue near term in terms of the financing they're doing for your device. many expected that the revenue guidance which was fairly good would be followed by higher earnings per share guidance which did not happen and so when you look at revenue, you look through to average reference new per user that did not come through to the extent that perhaps there was an expectation it would. hence, it does appear that the quality of earnings at least for those who were expecting that this company could do as much as

2.90 a share this year, you didn't get that boost in earnings per share that perhaps some had hoped for when the call when they went on the call. a look at arpu. maybe the hope is fading for the higher end of the range for the optimistic analysts and investors out there. don't forget at&t has done quite well as we've seen this rotation from growth to value. particularly because of its dividend yield. far better than verizon. adoption has been very strong we know that. but you're lending money to buy a handset and the question is, will it come through to the bottom line or are these people -- are the people migrating this perhaps going to spend a little less. that does at least at this point appear to be the case. so we'll keep an eye on it. again at&t had been doing very well. it is giving back some of the gains today with what was not the raise in eps guidance somebody hoped for. nobody talked about them being

able to maintain the dividend. u-verse did well. generating decent cash flow but there was that question of higher epps guidance. >> i'm on the conference call and see the stock opens -- runs to 36 after they announce. go to the conference call and at&t tells a great story but you start realizing wait a second the competition here is actually hurting them. there's actual -- now they would -- that's not their theme. this conference call is -- basically you would think the stock is at 38 because it was so bullish. but the company -- and the company spin things well. in the end the questions on the conference call, if things are good why aren't you raising. that's right. and that was the critical component killing the stock. >> they didn't come through. on the subject of future acquisitions they continue to now this new mantra in terms of europe seems to be fading that they will go after a vodafone or do something there. >> window closing? >> the same language they used

in the morgan stanley conference in the weeks prior to that. the cfo stevenson was not on the call. >> yeah, he wasn't. stevens was. >> stevens was. >> stephenson was on "squawk box" this morning. >> this is why this business is so hard. if you read the release and through the investor briefing you want to own at&t and you got that good yield and getting killed today. as david pointed it had run up. >> we talked about xeps that have beat. a bunch of misses today. owens-corning, intuitive surgical getting walloped at the open here. >> you know, this cree one of the stocks, the light bulb. you keep hoping this is it. they're going to like do the breakout and everyone reiterates buy. owens-corning blew away the number last time. people got their expectations higher. there's -- there are some that aren't great. but you know, both of those are ones where they had raised or people were looking for big

things. versus the ones they weren't like boeing. ems, everyone was crazy going vm wear in the quarter. the stock getting killed. it delivered a good number. brinker, symbol eat and deliver a great number. >> with all that dow up 3 points. to mary thompson on the floor. good morning. >> good morning, carl. we turned positive with the dow. the s&p and nasdaq remain under pressure. we're waiting to see whether the s&p and nasdaq can make it seven up sessions in a row. yesterday for the s&p closing within striking distance of its record closing highs. same thing with the dow which is now up 5 points. what we're seeing right now is a little weakness in the finance, financial stocks as well as telecom stocks, at&t as david was pointing out earlier. the scene setting, the earnings numbers, they are mixed so far, also overseas in europe we had a down session or have a down session right now despite positive news on business activity in the region with germany strong, france was a little weaker. china data disappointing.

factory activity there down for the fourth straight month. that's putting pressure on copper today. which is down despite an otherwise up session for the rest of the metals in early trading today. quick check of the dow movers you heard david talking about at&t, disappointment. there wasn't stronger guidance from the company. procter & gamble lower after its earnings ahead of expectations. revenue missed. cut its full year adjusted outlook. stock off a point and a third and boeing with very strong results. its stock up 2% in early trading. we're keeping watch on the transports as well which right now are just about well within striking distance of its all-time high as well, about three points away. of course helping this is the news from delta airlines which came in with stronger than expected numbers despite canceling 17,000 flights in the first quarter. the company's ceo making positive comments saying its joint venture with virgin atlantic and the revenues from the add-ons or perks with we pay for helping to drive revenue.

norfolk southern done after reporting a decline in quarterly profit. it's seen its business impacted by a decrease in coal shipments. dow up about 6 points. . to see a little weakness in the s&p and nasdaq. back to you. >> thank you so much. mary thompson. let's get to the bond pits check in with rick santelli of the cme group in chicago. welcome back. >> thank you, carl. you know, when you look at how many days in a row the equity indexes have been up, it's very surprising to many that the interest rates aren't complying with that same upside in yield, downside in price. if you look at a two-day of five-year yields an two day of tens you can see that we're clearing flirting with challenging yesterday's low yields. the longer maturity the more that dynamic is in place because the dynamic for 2014 has been a flattening yield curve. short maturity yields seem to be stubbornly higher than the longer maturity yields. open the ten-year up to early february, very relm vapts. we are in a range and we seem to

always visit the low end when equities get dicey. when equities right themselves we drift higher but as you can see on this chart with the low yield of the year the first one, right around 2.57, 2.58, that we touch the low end of the range and here we move back up. we dabbled under 2.70 briefly today. 30-year bond seems to be the one that has the most buoyancy regarding price. it's the most pressured yield. now one week ago we were at a 3.44 closing yield. open a chart up to june of last year that is basically the lowest yield since then. we're right in that zone hovering at 3.48. the winning currency? the pound versus the dollar and it's not so dissimilar if you viewed it against the euro. this currency is hovering at the best level in the zone, the best level since the summer august of 09. we need to pay attention there. the uk economy and their monetary policy just seem to be working in a much more efficient

fashion, at least with regard to pricing their currency. you would think when our fed programs end, like the taper, maybe 0 interest rate policy, that our dollar would do better. look at the year to date chart of the dollar. not only down on the year it is not the type of pattern to build confidence to the upside. carl, back to you. >> rick, thank you very much. rick santelli. when we come back, former apple ceo john sculley hear what he has to say about the company ahead of its earnings tonight and ahead former white house economic adviser, ed la zeer will share his vision of an economic lack luster economy. this is the biggest decline in about a year. we're back in a minute. i've always kept my eye on her...

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dr. pepper snapple one of them. we've seen downgrades of this company because they are more length e leveraged to soda. >> beat by 15 cents, reaffirmed core guidance. this is one of those companies this guy young runs it and talks a big game and then delivers. i mean i thought carbonated was supposed to be bad. diet was supposed to be bad. i mean what this shows you is that coca-cola and pepsico maybe are underperforming what they could deliver. i don't know. i mean this is a small company. but it's been a big winner and has a good yield and my hat is off to them. frankly i don't know how they do it. >> one of the best performers on the s&p. you want to preview apple and facebook tonight? >> apple, i think both of these are not this quarter stories is the way i look at it. apple, if apple has new products and can make a second half story the stock goes higher. facebook talk about what credit suisse talked about the optionalty and upward biased estimates from multiple offering

products that stock will do well. facebook has run in advance. apple hasn't. >> facebook is expected to have a tremendous quarter. >> i know. >> the question i think is the comps that will follow in the quarters to come. the monetization that might be helpful to them of instagram and video. >> we have to hear that instagram is doing -- there's a lot of questions. hey, is facebook passe. 1.3 billion users. not passe. facebook is many different companies now. and they each have to sit -- it's each tub sits on its own bottom. want to hear about instagram, mobile, advertising and i want to hear that the numbers that these guys at credit suisse are putting out are viable. this stock is cheap on a 2016 basis. you're talking about a company that tells below market multiple. >> right. >> how can that be? >> right. >> within -- >> if they can maintain that growth rate. the quarters are getting tougher in terms of -- >> yes, they are. >> but when you talk about green light capital, a tech bubble r

they talking about facebook or talking about cloud, software as a service, where morgan stanley came out yesterday and said these valuations have been cut in half but stock has been cut in half but much more expensive than a facebook. >>p ale meantime -- >> it's cheap. >> yeah. >> that's sort of the shoulder shrug is what you get a lot with apple. >> it's cheap. >> and the promise of products later in the year, right? >> financial story. we want products. we want products. we want bigger screen, be able to watch. i don't know. i'm at -- my travel trust owns apple because we figure they're paying and one day it's going to be good. that is a good enough reason to own a stock? >> not sure it is. >> ge, apple, i have a couple of those. >> i thought it was interesting, the column yesterday, who knows the company well, saying it is time to get on the move when it comes to a new franchise, whatever it's going to be. mobile payments, health monitoring, the things that have been promised for a long time. >> you got the deceleration of cell phones. mid 20s down to 13.

people perceive apple as a tablet and cell phone company. if you had project x and brought out project x the stock goes up higher. if they don't have project x i don't know goes down. >> throws hands in the air. >> i would rather be boeing. >> when we come back stop trading with jim, dow down 20, back in a minute. [ bagpipes play ]

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♪ time for cramer and stop trading. >> look, all you keep hearing about when you get oil guys off the desk is the permian, the permian, so big. david la czar, haly burton. think of concho resources and pioneer, pxd. concho, particularly undervalued, no sponsorship from the street and will go up. secondly i want you to be thinking secondly, there's going to be a deal on gold. nobody cares because gold is not going up. i think it's going to be abx new month. i think it's going to be a real deal. everyone ignoring it saying

ho-hum. this will be the beginning of multiple deals. too many miners and costs too high and those stocks should be bought. >> they were close but didn't get there. >> no cigar. >> when you look at gold stocks we have been waiting for consolidation forever i think it's going to happen. >> not saying who necessarily will be first in line. >> if barrett and newmont get together i want to own them. i think that's a good combination. >> the history of those deals has not been one that benefited shareholders because there has been consolidation. >> there has been. time for another round. they have to find a way to cut costs. hard it to find gold. gold is up. i want to em efa size permian because it is the biggest -- remember sheffield came on "mad money" and said the permian is the second biggest field after saudi arabia and so far i keep hearing it. i keep hearing it. nothing that says he's wrong. >> all right. how about mad tonight? >> ppg, now chuck bunch delivered another great quarter. this to me is dow chemical on

steroids. better company going higher. let's hear what chuck has to say. he's a remarkable executive nonpromotional as so many of the good ones are as mcnerney is by the way. >> promotional win your commercial airline margins keep going up. >> what a quarter. >> see you tonight, jim. >> see you after facebook and apple. >> very exciting. >> "mad money" 6:00 p.m. as well. when we come back breaking news on new home sales and david's interview with carl icahn and a lot more. keep it right here. ♪

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welcome back to "squawk on the street" march new homes sales a miss 384,000. that's seasonally adjusted and annualized units down over 14% from our slightly revised 440,000 look in february revised up to 449,000. 384,000 is the lowest level since july of last year. and just to give you a rough idea of where it's been, in july of 2005, the high water mark for new home sales, was 1.39 million. now let's go for some more granular digging into the

important number. diana olick, in d.c. diana? >> wow huge miss, especially since we were expecting a bounce from better weather and construction starting again in the spring. we know they had a bad winter and saw starts fall blaming weather. but this is a huge miss. what is the price now 2.90. >> okay. . pricing power. that's the biggest one. we were talking about the builders they have trouble with land, labor, supply costs. they bumped prices up to 290,000 as the median price in march this year. that's way up from 257,000 last year and that could be your trouble with home sales right now. that is, costs. people are simply not able to afford these rising prices in the home sales. ed a as we look at those prices and compare what we saw in existing home sales, home sales very flat because there's not enough supply out there. builders are not building fast enough. the realtors were begging

yesterday for builders to ramp it up. and citing the fact that builders did not have enough labor to do what they needed to do. to see the new home sales numbers go down that far in the spring when we expected to see more people out, more supply and, of course, remember these are signed contracts in march, not closings, which are the existing home sales numbers which go back several months, these are signed contracts in march which shows you that we did not see the kind of activity we expected, we did not see the kind of buyer traffic we expected, and again, i got to say, it's your prices that are keeping those buyers back. simon? >> so diana, for people, i mean are we saying we have serious questions now over the housing recovery or are we saying actually the home builders are simply raising their prices to increase their margins and sacrificing volume? >> it's all of that, simon. we've said for a number of months now that the spring season is just not shaping up the way we expected and here is your evidence of that. now again, these numbers are

very volatile but when you look at affordability which we have been harping on now for months, people are back in the market. they just can't afford these prices. investors are out. regular buyers are back in. they don't have all cash and having trouble with credit. so it's really all of the things you just said. that this spring market not shaping up the way we expected. >> i mean the banks are apparently relaxing the lending conditions we'll see. >> slightly. >> diana, thank you for that. diana olick on that breaking news. u.s. stocks are at session lows. the biggest names in tech about to report, apple, facebook, amazon and microsoft. which should you buy after the tech sell-off. joining you is doug mckay and kevin karen, market strategist with steeple private client group. welcome to the program. >> thank you. >> let me kick off with you. to clear this out of the way, david einhorn in the letter

yesterday from green light said, he felt that there was a bubble in tech, excessive enthusiasm for the cool kid companies have created a new bubble tech to rival the 1990s. do you agree? >> there are signs of that, but i don't think it's to the same degree. in other words, there's pockets in the ipo market, but there's still opportunities. every company in the bubble was trading 100 times earnings. you don't have that with things like google. >> kevin, tonight, of course, we have both apple and facebook reporting. which would be the better stock to double down on in your view? >> i tell you, i tend to be more of a value oriented person and the company with the better valuation here would be apple. now i'm not saying that negative things about facebook. they have a totally different dynamic and the more -- the bigger point i want to make about the earnings season is that it's very difficult to trade around earnings at all

because what -- if you look at a company like a facebook, company trades at 106 times earnings, take a company like ibm, for example, trades at 12 times earnings. what's the difference? that has to do with long running expectations of growth, questions about the risk of the business, questions about long-run competitive advantage. none of those get answered in one quarter's numbers. it's difficult to trade around an earnings event but i think the value -- that valuations would point towards some of the lower multiple quality bigger name -- bigger cap tech stocks. >> that said, doug, it is an opportunity when we get the earnings statements on where they are with expectations and pricing, netflix had a great day in the wake of its earnings statement. >> i generally agree. i don't like to buy around earnings states too. you can have great news, what you think is great news like a

gilead, for instance, and the stock not up much. i like to focus on the long run trends unless i have strong conviction or a sector has really pulled back. i own facebook and apple. am i aggressively buying both of them here because they're reporting earnings. no. i would buy them both on the expectations that two, three years out, the market caps of both companies could be considerably higher because the innovation and creative destruction they drive, particularly relative to the older tech companies like ibm and hewlett-packard. those companies may be value companies, but they have a -- are looking in the rearview mirror. as a form technology fund mutual fund investor you have to face forward not backwards. one reason warren buffet, for instance, doesn't touch tech stocks because unlike peanut butter tech changes. >> yeah. i mean it's an interesting debate right now on the street, this value versus growth. glad you brought up the earnings.

let me turn it to you, netflix, one of the momentum names, beat the street, gilead blew away expectations, with $2.3 billion in sales. perhaps the momentum names can live up to the high expectations and you want to go toward them. >> unless the earnings results come out and they are -- they tell you something new about the prospects for the company over a long period of time it's not -- one day's or a couple day's trading doesn't tell you very much. i would go back to -- i would go back to a comment that doug made about technology and valuation. i mean, years and years ago, a big company like ibm was still a tech stock, it had a -- it has had a change in its profile, gone from a high growth tech company to a lower growth tech company, but it's still worth something. arguably 20 years ago, ibm was very mature, but it did have valley and what drives is a trajectory of earnings. you have to look at both value

alongside all of the things like growth prospects and risks and competitive advantage. if you do all those things you will be at a better place than somebody who's responding or reacting to an earnings. >> just on that subject before i let you go, or both of you go, if when we get apple's results tonight, if ubs is right and boost the dividend and share buybacks, could that outweigh the possibility that they would guide down for the coming quarter or god forbid they suggest that the iphone 6 could be delayed until next year because of battery problems. >> asking me, simen. >> >> yes? >> i would say you know, apple reminds me more of -- it's not old tech, it's not new tech, it's kind of more mature, but procter & gamble growth tech. great article comparing them to a movie studio and again, i agree with the other guest, i would not buy simply because of what one quarter says, but the

stream of earnings over time and i think apple will continue to innovate. they're more focused on buybacks and dividend payments. it's a different kind of animal than a facebook. >> got it. guys, thank you very much. doug and kevin as we await big tech reporting tonight. >> speaking much earnings let's take a look at shares of yum brands. they opened sharply higher near all-time highs dating back to 1997 and then dipped lower. remember this is an unusual circumstance. because the company reported earnings, that came in above expectations last night, but the earnings call happened this morning at 9:15. ceo david novak citing bad weather as a factor for u.s. sales disappointing. let's talk to david palmer analyst with rbc capital markets. i assume you've been on call, something negative come across from dave novak and the management team that sent the shares lower? >> no. in fact, we've been getting epails from clients -- e-mails from clients wondering what's going on, is there something i

missed, the comments that's coming across from clients that are not hearing anything negative. in fact, seems to be checking all the right boxes about talking about improvement and that they are even going to be very free to use free cash flow to buy back stocks. it sounds like they have a good year teed up here. >> and when it comes to the result, china is the big story. more than half of its sales out of china. it's been revamping the menu, new rice dishes, adding about 700 stores in the country this year. >> yeah. >> have things stabilized? is the worst over for yum in china? >> it does seem that is so. they did a 9% same-store sales growth and almost 700 basis points of margin improvement from in that quarter. a massive margin quarter for the china business. there were weak spots around the world as we've seen in restaurant companies and the peer group, tough first quarter for non-china businesses for

yum, down mid teens profits for the likes of taco bell. there's noise in those numbers. also pizza hut, but again, the company is talking about impr e improving trends for those very businesses, being contributors to a very strong second quarter which has been our call along, that would be the best quarter of the year. we continue to see this stock grinding higher in 2014. >> the question is how much is baked in? that could be a factor behind the selling. jpmorgan put out a note just ahead of the release yesterday saying, look, the valuation doesn't look to go much higher. the china recovery is already in the stock and as i mentioned we're trading at all-time highs. doesn't look expensive to you? >> yeah. the valuation on yum is really a combination of businesses you can think of it as a sum of the parts where the china company restaurant business is trading at a significant discount to would be peers also hyper growth. when you consider the fact that the rest of the business of yum is highly franchised, over 90%

chan franchised and the peer groups, the taco bell and pizza hut, trading well south of their peer group or you can also compare yum to a starbucks which has superior growth now but over the long term the growth will narrow and both have super high returns, that's one of the reasons why yum will be able to buyback a ton of stock this year. >> predicting 20% earnings per share growth for 2014. on breakfast, didn't see it in the results, launched it at the end of march, cramer going out to get his taco waffle and lipitor, any anecdotal evidence that is making a dent in mcdonald's breakfast share some. >> you know, they're claiming it's haze a nice impact and great trial. i can see why they would be reticent to give numbers on that when talking about a trial period. any time you have the first month of anything, you could end up looking silly by talking about the first month of sales. but i do believe that they're going to have a nice year from

taco bell this year. and they're talking about that being in spite of a nasty first quarter about that being a mid to high single digit profit growth year. >> all right. good to see you. thanks for the insight and comments on yum brands. david palmer, analyst who has a buy rating on yum. says it's going higher. >> when we come back, former apple ceo john sculley will help us gear up for the company's earnings, view on the state of tech at large and david's ux cluesive interview with carl icahn. we'll hear what they thinks of bill ackman's bid and more. when "squawk on the street" comes back. comes back.e financial noise financial noise financial noise

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is ending soon. ♪ sleep train ♪ ♪ your ticket to a better night's sleep ♪ welcome back to "squawk on the street." i'm seema moody. check out intuitive surgical. reporting much weaker than expected first quarter earnings citing significant declines in sales of its da vinci surgical robotic devices trading down about 8.5%. it's been a roller coaster year for the company, now flat for the year. carl, over to you. >> seema, thank you very much. former apple ceo john sculley made headlines when he regrets firing steve jobs in 1985. sculley recovered to apple k -- referred to apple as a predictable cash machine. joins us for a first on cnbc interview as we look ahead to apple's earnings out tonight.

good to see you again. >> hi, carl. >> you were interviewed the other day and did say that the company is not valued today as a creative leap company. do you expect the conference call to back that up? >> i think tim cook set a high expectation for 2014 but in terms of new products but the new products are probably going to be towards the latter part of the year. so i don't think the call today is going to tell us much about that. i think what's interesting is that we're coming up this fall on three years as tim cook serving as ceo since steve jobs died and this may be the time this fall for his first creative leap with a product that is truly different than what he inherited from steve. i'm thinking of the iwatch as a possibility there. and that will be a really interesting time to see whether apple has still got its mojo and can still turn out these wonderful creative products. >> people are -- whether it's

looking at what nike is doing with their move out of hardware, some of the pieces for some, are starting to come together, but john, people still wonder, or argue, that apple -- the dna of what it was under jobs creatively has changed. do you think that's fair? >> i think tim cook is a different kind of leader. he's done a superb job of running a big, complex machine. i think you have to give him high marks for that. what we haven't seen yet is under his leadership, can he do the creative leaps and we do know, at least through rumors, that the iwatch may be coming out this fall. the iwatch has got to be more than just a cool piece of hardware. we've seen that products from other vendors like sony and samsung haven't wowed the industry much. primarily hardware devices like smartphones on your wrist. apple has to do much more than that. speculation is they'll have a

health book which could be something that could be part of the iwatch. they may take passbook with 600 million profile credit card users and make that part of the iwatch. we just have to see how much of the predictive analytics, what i think of as the personal digital assistant ideas we started years ago at apple can be fulfilled in a product like the iwatch. >> given what you know about apple's dna and the ideas you started years ago what about ap until mobile payments or e-payments. reed code has been reporting apple has been meeting with some executives in the industry, potential applicants, to lead the charge. is this a new business that for apple that it can change? it can could what it did to the mobile market, smartphone market. >> i think absolutely. i have been wondering when apple would put the pieces together. think of what they have. they have 600 million profiled names in passbook of credit card users. they have the one touch on all of their iphone deice vice --

devices which enables people to simplify buying a product without having you go through complex passwords. rolling out beacon, the convergence of the brick and mortar retail with the mobile e-commerce. all of those things could be brought together by apple and they could become a very formidable force not only in mobile payments but in mobile loyalty programs. >> john, more generally, there was a lot of chatter yesterday from the conference ta david went to of activist investors about how they think the west coast and the tech companies are way too clubby and many of them believe there's opportunities from them there. it would appear from the short side. i guess it was topped off by jeff ubben who suggested that, you know, once jamie dimon gets criticism for getting $20 million for running jpmorgan, eric schmidt is getting $100 million or did in 2011 for attending four board meetings. do you think this clash between the two sides of business

culture will have further sparks? do you think there will be big moves or just a huge distance apart? >> i think that's just kind of noise. the fact is eric schmidt came in at an important time in google's history. he was the adult supervision at a time when they needed it. now the co-founders are able to take on, you know, a very strong leadership role. and i think that focusing on how much any individual is getting paid is really not the story of silicon valley. silicon valley is an ecosystem of talent, of various kinds of funders, venture capitalists, lots of different strategic partnerships. so it has to be understood i think through a different lens than how much a ceo is getting paid. >> good to talk to you. see what they say tonight. thanks again for your time. >> sure. thank you, carl. >> john sculley. >> up next on the program, how you can get the full four seasons experience from spa

treatments to concierge at 40,000 feet. we're back after a quick break. ♪

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the sky is the new limit for four seasons. the hotel chain launching the industry's first fully branded private jet. robert on this one back at hq with the details including hopefully the price tag, robert? >> indeed. this could be the ultimate room at the four seasons. it's got a hand crafted bed, gourmet room service, a great entertainment system and a view from a mile high. four seasons today launching the

first four seasons private jet. converted 757 that will hold just 52 people instead of the usual 200 or more. now the plane will carry passengers on four seasons exclusive private jet tours. these are tours of exotic locales around the world where guests eat the best food, stay at the top resorts, expert guides talk about local culture and wild life. they have become one of the fastest growing segments of the travel business. abercrombie and national geographic and others are selling out the tours even though they cost between 50 and 120,000 per person. right now, all these companies use chartered planes. four seasons hopes to gain an edge and offer a better experience with its own private jet. meals on the four seasons plane will be prepared by private chefs, using locally sourced ingredients, of course. a concierge on board to book spa treatments, golf tee times and day trips when you land at the resort and special pillows, mattresses and duvets to create

a sexy bed experience. i'll leave that to the imagination. you can charter this plane a ten-day trip will cost about $2 million. by the way, you have to stay at a four seasons if you just charter the plane. carl, back to you. >> just discussing with sara and simon the degree to which 52 people on a plane is private, i mean we're stretching the term aren't we? >> not buying it, it's not private enough for him. >> normally that holds more than four times as many people, so this really is sort of a retrofitted, like one of those land yachts. a lot of space, a lie down bed and a concierge and lots of other lounges you don't get on a regular plane. semiprivate might be a better term. >> really interesting move, robert, because four seasons and we should remember, of course, that bill gates are major shareholders there, challenged by its growth. it ditched its ceo to get another one because the hotel chain isn't growing as rapidly as clearly those shareholders

wanted it to do when they brought in and took it private. wondering if this makes four seasons like a travel company where they're going to say we were -- based on the west coast, we will ferry high network individuals from america across the world to you, if you sign up to be a four seasons hotel or whether they've actually just looked at it and gone, actually it's cheaper for us to lease directly than through someone else. i think probably cheaper to simply lease directly. >> simon -- >> the bar is high on these private cabins. singapore has the fully enclosed bedroom. >> this is better than any of owes planes and you've done great reporting in the space and you know what they're doing here, is really saying, the top of the top market, in other words this private jet tour business, it's exploding. people are paying 120,000 per person and sold out. they can't create enough of these trips. i think they're going upscale even in the luxury sector and we're going to target the most wealthy consumer, best experience even the if that includes a plane. >> one question, what do the bathrooms look like?

>> they don't have the typical rain shower you would expect from a four seasons room, i asked that yesterday. they're very nice bathrooms on this plane. >> there is, though, the point that robert is making a kind of nuclear war on luxury at the moment. >> absolutely. >> in terms of investment. >> it's coming mainly actually from clearly the middle east where they have oil money but also through the asian carriers as you know because a lot of them have kind of government connections, more easy -- more able to borrow. if you fly west out of the united states you will get probably a better business class than go east. >> absolutely. what these companies are discovering what the wealthy around the world want is rare experiences and there's so much wealth being created, so many new million ayers and billionaires that want to travel and experience and are willing to pay prices that no one thought they would be willing to pay, so now you can include a private jet, throw it in and charge more. >> sounds good to me. >> robert, thanks so much. robert frank. bringing us more stories about

luxury travel in this country. nat gas inventories in a moment. crude has come back to 101 but talk about gas stock piles, the lowest we've seen in several years at this stage of the year when we know we're about to enter the summer driving season. jackie deangelis is over at the nym nymex. >> that's exactly right. lot going on in the energy complex this morning. start with the department of energy on crude oil inventories. a build this week of 3.5 million barrels in line with what they were expecting. what was interesting we were lower this morning and now slightly higher but coming down on this number. it is a bearish number. still talk to john gilldove and he said there are a couple things you need to think about that could pressure prices further. first of all iraq announcing production is above pre-husain level -- pre-husain era levels i meant to say. meantime iran exports to china aring continuing to increase.

this is as sanctions are backing off a little bit. he thinks we have reached a top in terms of the oil prices and will go lower. the wildcard is ukraine and that what traders are watching right now. reaction to this number from the department of energy we are seeing prices coming off slightly. crude right now 101.66. back to you. >> all right. thanks so much, jackie. >> when we come back, david's exclusive interview with carl icahn. we'll find out what carl thinks about ackman and allergan and his take on ebay and funding the new activists. back after a break. we needed 30 new hires for our call center. i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click;

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comcast business built for business. welcome back. i'm seema moody with this market flash. two biotechs out with earnings. we begin with gilead rising after it reported a sharp profit increase helped by its thousand dollar bill pil to treat hepatitis c. a good quarter for biogen which reported a rise in first-quarter profit. the company raising its full year outlook as a result the stock up about 40% the past year giving ground a bit. a programming note biogen's ceo will be on live on closing bell at 3:00 p.m. eastern here on cnbc. david? >> all right. thanks very much. of course i did speak with carl icahn yesterday after a long day of interviews at the active passive summit in midtown. he did a presentation to the

audience and we sat down for a taped interview given the late hour and talked about any number of things including his two most recent campaigns apple and ebay, both of which i at least put forward. he had not succeeded in. as you might imagine when it comes to ebay, mr. icahn disagreed. >> the reason, we did get dave on the board. >> right. >> and i have a confit, meaning i can talk to them. i get involved. when i get involved it's very helpful. >> you think even though -- you were not going to win a shareholder vote there. i thunk you're right. they gave me a seat anyway. >> a guy they like and you like. you both agreed on this guy, on dorman? >> i actually suggested him, yeah. >> you did? >> yeah. he was on [ inaudible ] and did a great job there. >> i know. >> you think you came out ahead. >> they're not going to split up

paypal but you can continue to have confidential conversations with the board, keep prodding them. >> a standstill there, i can't buy or sell unless the window is open. that's okay with me. i want to understand what happened. that's what i do with all these companies. >> of course it was cocktail hour which we did avail ourselves of during that. we followed that by talking about apple which is going to report after the close today and which mr. icahn holds a very substantial dollar stake. >> you still own apple, right? >> yeah. i still own it. i've never sold a share. >> haven't sold a share. >> not a share. i think it's undervalued. i mean it's a long-term hold. i think there's been billions and billions in research and development and that's going to come to fruition and when it does, i think apple is a great company, great ecosystem. >> right. >> and hopefully it will work

out. >> well, hopefully it will work out. we always hope. many things have worked out for mr. icahn. during his speech yesterday, he sbr introduced something i have not heard before, he is going to start to seed, if you will, other activist funds. that's right. start to give or put in money to younger activists who will then begin to practice what, of course, mr. icahn has been doing for a long time. i asked him what this plan is all about and, of course, how much money he conceivably would be willing to doll out. >> i think activism is so important and there are bright young guys around that need backing for that. and i'm going to start looking to get a few of those guys in and see how they do. >> so we could see some icahn cubs so to speak. >> we have some now actually. i mean, i would like to see more of this done. done by the real good guys. i think it's very hard to break

into the business of activism. you have to have staying power, fairly good bank rolling and i think it's important to do it. >> what are we talking? do you have a set number in mind you've set aside for activists? >> even if we invested a billion, $800 million, we have so much capital we wouldn't be extremely material, you know. >> why would you do it then? >> i'm telling you, because i think it's a good thing. look, i want to make money anyway. i'm not going to argue. >> capital might be better deployed elsewhere. >> i don't think it's muletily exclusive. so much cash around now, that it's not mutually exclusive. >> iep is icahn enterprise, put in a plug for that given its strong performance over the long term. there was the big news from yesterday, of course, the hostile bid from valeant and partnership with bill ackman for allergan. how could i not ask mr. icahn to

weigh in on that situation involving somebody he has not quite seen eye to eye with in the past. >> with all the stuff i've said with ackman back and forth, i think he's dead wrong about herbalife and we have our differences, but i never said he's not a smart guy. >> right. >> and i think the concept of this is good. i hope it works out better for him than herbalife did. i think will. but that doesn't mean there's something wrong with that. what's wrong with making a bid for a company and using somebody's funds? what's the difference whose funds it is? >> well, it's legal. there are a number of people who feel like it's front running almost. obviously he -- i want to make it clear, it's legal, he's a group, a partnership, valeant. >> i never thought i would be here defending ackman. he agreed to put $3 billion in, the little i read of it, i might be wrong. >> put his own capital at risk. >> put his capital at risk and they told him buy some stock.

>> right. >> that's not illegal in my mind. >> it's not. i'm not saying -- >> i don't think it's immoral. he's doing something for the company. look i frankly never thought i would be defending him but i don't think there's anything wrong with that. >> of course, mr. icahn would invite other corporations to consider allowing him to use his capital for similar situations. never a dull moment with carl icahn. >> it's interesting that he sort of backed him up on that idea. what was the response from other activists? it's a little controversial. obviously you make the point that it's completely legal and above board, but it does make you think not ordinary investors they can't have access to this information and they can't do this kind of move? >> i can't tell you how many e-mails i got from sophisticated people, hedge fund managers, bankers, analysts wondering about this, why it is allowed. why ackman was allowed to in a sense front run this offer he, of course, knew about. and again it is completely legal

but certainly does feel -- he said there's nothing immoral about it icahn said but others feel it's not a level playing field. >> if a ceo was about to embark on that deal and went out and bought stock separately in the market or options to play it that would be illegal to play it. >> if the ceo knew his company was going to make a hostile bid and he went out and bought the stock for himself absolutely. >> why is that different? >> because ackman is part of a group buying the stock to own the company. he's acting on behalf of valeant which also could have gone out and bought the stock and did buy a little bit. therefore, they're going to own the company and make an offer. they're not benefiting personally in sense of apart from the partnership. >> to many people that that would seem semantics as ackman has a stake in his own business. >> his fund benefited from it but part of the group making a bid. >> i also want to bring up today is the day where coke shareholders will get their vote. covering this story for a long time and it has been sort of dramatic, much more than usual,

because coke shareholder david winters, wintergreen, value investor raised a public loud debate on management compensation. he really started this call back in march urging shareholders through a number of letters, interviews here on cnbc, to vote against the equity plan saying it's dial dil looted for shareholders by 14 to 16%. he only owns about 2.5 million shares for coca-cola, less than 1%, we know that other small shareholders have sided with him but, of course, the biggies and big one is warren buffet, total swing factor here. coke's largest shareholder. winters has appealed to him directly saying we don't believe it would be consistent with berkshire's long engrained culture to support such a plan at any of your equity holdings. he wrote that in a letter to warren buffet filed it with the sec. buffet has been silent on the issue. his son howard is on the board. warren buffet himself used to be on the board. but coke itself has been very vocal, defending itself firing

back saying winters is wrong, his math does not add up. the shareholder dilution like 1% and consistent with previous plans and the industry at large. here's the broader question for shareholders today as they consider their vote. meeting starting at 12:30. coke has underperformed the s&p 500. if you look over the last five years, in taking out the dividends it's up less than 1 punz% while the s&p 500 is up 120%. becky quick will be interviewing warren buffet later this afternoon and it will be great to get his comment. we have not heard from him as i said on this issue. >> i think it depends whether you're rewarding past performance or trying to retain and attract talent to improve the performance of the business moving forward. >> yes, you have to incentivize.

>> keep the best in coke to turn this around. >> they get rewarded when shareholders get rewarded and that's coke's argument as well. >> up next on "squawk on the street," former obama adviser ed lazear knows how to breathe life into the lack luster economic recovery and capital gains tax. more to tell us about his plans after the break. today is wednesday

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welcome back to "squawk on the street." and wednesday's edition of the santelli exchange. my special guest ed lazear. ed, we just went through tax time and you've written many good op-eds regarding tax policy. i have one simple question. easy answer i would imagine. do -- does the tax code incentivize investors to make good investments? >> no. that's the problem. right now we have a system that creates disincentives for

investment, creates excess incentives for current kunl summion and should move away from that in the direction of what most people think of is the right thing to do move towards a consumption tax as an easy way to do that, the easiest way to allow full deductibility of investment, right at the time with carry forwards and carry backs and you're basically there. it's an easy way to do it. it with have an enormous effect on gdp growth. that's what we should be doing. >> have you ever run into a normal, logical person from this planet and this solar system that would disagree with anything you've just outlined? >> no. i shouldn't say no. that's too strong. this is not radical stuff, stuff accepted within my profession. it's a little tougher case to make for politicians. that's always true. >> and i guess that's the point. you know what, ed, i'm going to let my cynical gene pop out. everybody knows, what happened to mr. camp? he is now adios, he's gone. what's his committee, house ways

and means been working on for several years? >> that's right. but what we need to do -- >> tax reform. >> what we need to do is we need to keep our eye on the ball. lots of aspect of the tax code that are annoying, filling out forms and -- >> when it comes to lobby groups and lawyers and accountants, listen people, if you really want to see any change in the tax code, and god knows we need it, just vote on all the incumbents. they know what's going on and they get zero input into fixing it. what about the economy at large. let's talk about the economy. everybody's out there talking about 3, 3.5%. are you buying into this? >> i'm not. my best indicator of where we're going is the change in the stock market. because the stock market, the market really has the best information of what the future is going to look like. >> sure. 40% of americans are benefits from the fact that a lot of the rally i think has to do with the fed pushing people into a riskier asset class like equities. so you really think this is reflecting there is a good link between stock prices and future of the economy. >> here's how i would look at

it. we have about -- the s&p went up by about 50 points over the past three months. that gives us a projection of about 2.5% growth for next year. >> i don't disagree with that. >> it could be up or down obviously, but if you're or dow obviously. if you're thinking 2.5%, it's better than where we've about. >> now, what are you thinking of inflation, where it is right now, just roughly? >> well, i would say high ones, low twos. >> okay. so we're at 2.70 on a 10. >> right. >> the real yield, let's say, 1.5%. >> right, right. >> does that sound like a fixed income market looking for much better than 2.5% growth? >> that brings us back to where we started, which is you have to increase the returns to investment. you have to get investment up. and the only way to do that is to make sure that people have the right incentives to do it. >> i tell you -- >> increases productivity, wages. >> john taylor's rule says we should be at 1.25%. i look at what the federal reserve has done to capital. they kick it around, treat it like dirt. maybe if they rose it to a

position of prominent it would be used more wisely and the economy would do better and capital would be appropriated to areas that request actually grow in the economy. sarah eisen, back to you. >> all right, love the conversation. i misspoke. i have to apologize to ed. i said he was an obama advisor. he was an advisor to george w. bush. >> distinction there. the tavern on the green is back. we'll take you inside the $20 million makeover right after this break. [ bagpipes play ] make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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i'm looking at you phone company dsl. go to comcastbusiness.com/ checkyourspeed. if we can't offer faster speeds or save you money we'll give you $150. comcast business built for business. ♪ new york central park, the iconic 80-year-old tavern on the green reopens tomorrow. it used to boast the highest revenue of almost any other independent in the country. but it's taken two years and $20 million for our next guests to get the tavern back on its feet. we welcome philadelphia entrepreneurs jim kayla and david salama. david, how tough a buildout was this for you? >> really tough. a lot of obstacles, a lot of challenges, a lot of

limitations. but, you know, it seems like a blip now that -- >> a blip? >> yeah. >> i think, jim, obviously the city has a big interest here. it gets $38 million in concession fees or a percentage of annual sales. talk us through what we're seeing on the screen here of what you've done and what the city did for you. >> the city did the exterior except for the awning, which we did. we did all the interior. there's three dining rooms. we tried to give the building the classic sort of gothic look that the outside has. >> at the same time, though, less showy and a more modern approach. is that fair? >> yeah. >> yeah, sort of a marriage of what was there and what had to be reinvented to make it fit. things that were missing from the original building. >> david, it's had a checkered past, not least when there was a $2 million settlement on discrimination. is the business case solid for you guys? is the location everything despite what's gone on in the past? >> absolutely. i think, you know, it's smaller

now. it's more handleable. and david and i are up for the challenge. >> what will the unique selling point be? >> it's sort of -- >> central park. >> -- central park and a restaurant again. it's not a catering venue, and it's a place for everybody now. >> it's always good to see new entrepreneurial endeavors. thank you very much. >> thank you. >> david and jim. for more on hbo's new partnership, "squawk on the street" will be right back. e ri? talk to your doctor about viagra. ask if your heart is healthy enough for sex. do not take viagra if you take nitrates for chest pain. it may cause an unsafe drop in blood pressure. side effects include headache, flushing, upset stomach, and abnormal vision. to avoid long term injury, seek immediate medical help for an erection lasting more than four hours. stop taking viagra and call your doctor right away if you experience a sudden decrease or loss in vision or hearing. this is the age of taking action. viagra. talk to your doctor. if your doctor decides viagra is right for you, you can fill your prescription at your pharmacy. or, check out viagra home delivery,

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>> announcer: welcome to "squawk on the street." here's what's happened so far -- >> the airlines are flush. delta delivers a number despite huge cancellations. the airlines are flush worldwide. what do they do when they have money? they buy a boeing plane. >> it may not be something that is copied, but it is a very important milestone in the maturation of activism, i believe, and what it means for hostile bids, which have been so far and few between, because they never work. [ bell sounds ] >> there's the bell. >> march, new home sales, a big miss, 384,000. >> this may be the time, this

fall, for his first creative leap with a product that is truly different than what he inherited from steve. i'm thinking of the iwatch as a possibility there. 11:00 a.m. on the nose on the east coast, 8:00 a.m. out west. here's what we're watching. we're witnessing the second tech bubble in the last 15 years. those words from famous investor david einhorn. the big question, should you heed his warning? plus, for the first time ever, hbo's original programming, think "the sopranos," "the wire" are coming to amazon. amazon is targeting one rival in particular, and if you haven't guessed yet, we'll tell you which one. all eyes on apple. should you buy or sell? we've got ideas. and happy birthday, youtube. today is the ninth anniversary of the video service. we'll show you the first video ever posted on the site. it's pretty hilarious. joining us john steinberg,

buzzfeed coo and cnbc contributor. so add david einhorn to the chorus of warning another tech bubble. he says there is a clear consensus we are witnessing our second tech bubble in 15 years. what is uncertain is how much further the bubble can expand. now, einhorn didn't reference any specific names but did say he's shorting a group of the so-called momentum stocks. he has done this before, on names that are not in the tech space. what does it mean now that he's saying it about tech? >> i think it's too simple to say it's a bubble. some of the stocks are expensive and some are not expensive. the nuance in all of this is the companies are diminishing profits to have massive growth, and they deliver or don't. look at netflix, right? everybody gave them a hard time for spending all that money. the first segments in international, already turn eed profitable. we'll see it in amazon. it's a matter of which companies are bluffing and not bluffing. >> he says he's identifying bubble basket, names that could

see up to 90% downside once this actually corrects. >> yeah. >> do we have any of those out there in the market? is that a thing of the present or a thing of the past? >> i can't think of -- i keith going back to the keith perry line from goldman sachs where he said there's 16% overvalue on a five-year rolling basis in the tech stocks, so they have another leg down to go. i can see a lot of the stocks going down 15%, 20%, but 90% i can't see happening because they're real companies with real earnings. and look what happens when they don't keep growing. look at apple, trading at 11 times now. it's no longer a growth company. it doesn't make it a bad company. the multiple compresses. >> a lot of people might have said that about cisco in the last dot-com boom. and he points out it fell 89%. >> and the revenues went off a cliff, too. i don't see that happening with amazon. it's basically trading at 1.3 times sales, right? and the margins are actually expanding into the upper 20% right now. it's fundamentally different, because the companies are so median real, i think. >> but you do seem to be backing

him up on some fronts, that those companies that are going to eventually tracks to maximize margins and fail -- >> yes. >> -- are good shorts? >> yes, and i do think the companies that say we're spending a lot of money, and we're investing in this unlimited market opportunity, and they're saying that because they don't want to be profitable or can't be, those are the ones to look at. going into netflix last night, i wasn't convinced that the price made sense. i thought it was expensive. when i looked at how far ahead they are to turn profitable, i think they're further ahead. >> he said some of the companies you mentioned that are not profitable will trade simply as a multiple of the cash they have on their balance sheet. is that too simplistic? >> i don't want to be kind of a touter, but there are things that are fundamentally different. if you look at the amount of stuff we do on the smartphones, the amount of content we watch over the top, and you look how quickly ad revenue has moved to mobile, facebook 53% from nothing a year ago. fundamentally, the dollars are moving. so it's kind of hard to say this is all just sort of vapor, you know? >> you mentioned amazon.

of course, a big story today. amazon and hbo together at last. for the first time together, "sopranos" and "boardwalk empire" will be available on amazon prime instant video. they'll air old episodes beginning may 21 and newer shows will pop up about three years after airing on hbo. not mentioned in that release, hbo's hit show "game of thrones," will not be available on amazon. if you wanted to know who amazon's targeting with this deal, just check out shares of netflix, which are down more than 3%, at least, in the early going. is this a swipe -- a shot across the bow at hastings? >> i don't think so. if you look at the conference call last night, hastings said it's not a zero-sum game between them and amazon. and i buy that. first of all the, they're viciously competing but they're frenemies. but if you go over the top, you'll need lots of different services to augment what you're not getting from the cable company. yes, they're frenemy/competitors, but it's the most sophisticated group of

business people. rather than fighting each other, they're saying content costs are expensive. let's window it between all of us, and let's go after different market segments. if you want "game of thrones," you'll get hbo. >> how much of a complement between amount zone and hbo is? you need hbo go, but if you're okay with older seasons of "the wire," which is not on tv, you can get that through amazon prime. is there a lot of complement between the two? >> i think it's totally complementary. it's the business school definition of complement. you hear so many people now that discover a series year later and rip through seven seasons and look that netflix is on the amazon box. netflix is on the apple tv box. they all are at each other's throats, but they won't -- >> although we know there's no love loss between hastings and pepler, so they could have done this with netflix and chose not to. >> yeah, but they also can't

necessarily do it with netflix, bha because the dynamics are different. netflix does all sorts of new series and a higher volume than amazon is doing. amazon is weaker now, and can partner more aggressively with hbo. i bet they do partner down the road. >> there's a quote where one of hbo's lead negotiators in this says we entrust amazon with this programming. that word "entrust" is something we haven't seen in the partnerships, and it does give you a little bit of sense of some competition here, that they had some choice maybe. >> i think that these guys all like money and margins better than they care about their competitive instincts. and i think ultimately, just like the hollywood studios all compete with each other and all sell programming to each other all have their networks and are selling to each other's networks, that's a dynamic that will evolve here. neither of the executives will let the personal animosity get in the way. they're fundamentally different. hbo now, you need a cable system to have hbo. if hbo goes over the top, which i think will eventually happen, it could be different.

in the short term, maybe complements to be done. >> maybe it's not whether it's amazon or netflix, but the fact that hbo is opening a wall that's been closed for a very long time, right? they have not done this. >> yeah. and i remember the buzzfeed, when peter laurie interviewed him, and he said they'd go over the top, and they said it's just math. the math doesn't make sense for them to lose the cable fees to go over the top. but the day will come. it is absolutely inevitable that hbo is going to be told on a stand-alone service. i'm speculating, but i can't imagine it not happening. >> amazon, we've debated, what would justify the higher price for prime, now that we've seen the newer features. if you're a prime customer, you don't pay any more. >> and i was going through the press release, and it does seem the content you get as a part of prime. netflix, raising it a dollar or two over the next year, because they'll buy more content. this is a classic case of adding more to the bundle and raising the price ever so slightly. they're business school economics professors with how

they're playing this game with sharing costs and pairing up when it makes sense. >> finally, a big day for earnings, of course, facebook set to report after the bell this afternoon. analysts expect about $2.3 billion in revenue, a big jump from the 1.4 billion a year ago. facebook's ad business may be the thing to keep an eye on. more than half the company's revenue now coming from mobile advertising. everybody thinks the quarter's going to be in good shape. >> yeah. >> we know pricing is pretty strong. we know about the new network. is there the threat of overpromising, underdelivery? >> i think there's an opportunity in this. i talked to cramer a lot about this. quarter after quarter, they looked at google, and the cpc, and the number of clicks and used that as an indicator, when it was an auction and they were turning dials. the facebook opportunity is, if they come out and say the add units were lower or the average per user is lower, it could be a buying opportunity. the stuff doesn't matter. all that matters is the daily active users over the monthly,

the overall revenue number, and the mobile percentage of revenue, which was 53% last quarter and we want to see go up. i think if the market whacks it, and i think it will move 10% on earnings, it could be a good buying opportunity. >> a big deal for the quarter. they spent $4.7 billion in cash on deals. they only had 3.3 billion on the balance sheet at the end of the year. do you think there will be a question about liquidity and where it's getting some of this? >> i don't know on liquidity and the cash balance. but i think we'll see the same thing with the other acquisition earlier this quarter, where it was higher than expected. we should look on the call if the whatsapp acquisition is slightly higher costs, that impacted margins. >> some people on twitter ask, hey, when did john steinberg become a tech stock valuation guru? do you ever get uncomfortable with that? >> you know, i get uncomfortable

when i'm overly optimistic, because i'm naturally lly optic about the sector. the ebitda measures and looking at peg ratios, how much growth influences it, you can get a sense of where things are relative to the comparables. look, you get nervous anytime you make calls. i feel like it would be disingenuous to say not what i feel. >> you did talk about when we were talking about the tech bubble, you could see some names correcting. what would you say about facebook, given how much money it's proven it could make, is it susceptible to correction? >> when you look at the peg of .9, there are stocks higher than that, and stocks that are low, in the .5 range. i don't think it's a cheap stock. if you look at the credit suisse report that came out yesterday that showed 20% upside to revenue, 26% upside to ebitda, relative to where consensus is on the street, if that were actually to play out, you would actually see the multiples make more sense. >> we should point out you spend most of your day looking at business models. >> yeah. >> reading balance sheets.

it's not like you're a stranger to all of this. you're getting well known on twitter. >> well, that's good. good or bad, i guess. >> john steinberg, thanks. >> thank you so much. coming up, we talked about the second tech bubble, but how do stocks compare now versus '99. we have the numbers. first, rick santelli, what do you have your eye on? >> well, we're going to talk about -- you mentioned 1999. why aren't treasury yields partying like it's 1999? i look up at the equity indices. one out of three is in positive territory. the s&p. when i look at interest rates, five-year, seven-year, ten-year, 30-year, all higher than they were the last day of 2013. why is that? we're going to discuss why. all at the bottom of the hour. predicting the future is a pretty difficult thing to do.

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dow is down 26. pretty weak day for data, especially the new home sales. the industrials, as well. a big winner on the s&p this morning. our seema mody is watching that. >> the industrials index, one of the best performing sectors. why not? boeing, delta, ingersoll rand, ryder, general dynamic, all reporting bitter-than-expected results, and when you do, you

attract investors. it's a good day for the index driven primarily by earnings. kayla? >> thanks. from industrials to tech, david einhorn says there's consensus of a second tech bubble. looking at the first in 2000 and a valuation compared to what's happening today. dom chu has more. >> hey, kayla. it doesn't look that similar. here's the reason why. so tech bubble, no tech bubble, we went back and checked out what those valuations were. so if you look at this, first of all, we have the s&p 500 going all the way back to the peaks of the internet. you can see there, we're above those levels right now. so on a straight price basis, yes, we may look bubble itish, look at the valuation perspective. we went back to the peaks of the internet bubble and said, hey, valuation-wise, it's also different. it was trading near 30 times earnings back then, the s&p 500. it's trading about 16, 17 times now. not nearly bubbilicious type

territory. what about the tech companies back then that were trading at the bubbilicious-type valuations? look at what we have here. microsoft, oracle and cisco. back in 2000, microsoft, big-name tech company, still emerging back then, was an 83 times earnings, pretty rich. also, oracle trading at double the valuation, $163 in price for every $1 of earnings it generates. look at this. cisco was trading at 230 times earnings back then. fast forward to today, just for perspective. we know these are mature companies. today, microsoft 15, oracle 17, and they're not as growthy anymore, but still interesting to look at. here are some names more iconic in today's tech trade. micron, the semiconductor company, apple, and netflix. micron trades at 11 times

earnings, so not too bubbilicious. apple trades at 13 times earnings. an interesting one, though. this may lead to the bubble talk. netflix trading at about 136 times earnings, so maybe there are signs of it there, although one astute investor did tell me, the more you hear people say this time is different, the more you may think that maybe things are due for a correction, carl. back over to you. >> yeah, einhorn starting a conversation here, dom. thanks a lot. speaking of which, apple set to report earnings after the bell, and it's a good bet the stock will make a big move one way or the other. how do you play apple during trading today? we have some ideas after a short break. ♪

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oop apple is expected to re its earnings later today. let's bring in ben, technology hardware analyst over at barclays. ben, great to see you again. good morning. >> hey, carl. great to be here. >> you had an overweight for years when you took it to an equal weight, we had you on. at the time, you said, look, i don't think things like a watch will move the needle over the long term. i assume you're thinking the same going into tonight? >> absolutely. i think that apple is in a trading range. i expect some cautious guidance for the june quarter. the street looks a little high. looking for high single digit revenue growth for the june quarter. i wouldn't be surprised if they guided a lot flatter because they're in an iphone transition. and then, when we did the math on the iwatch, it is very hard to get a big earnings contribution. it feels like a device that's more of a companion for the iphone. i think that we do need more innovation and desperately tonight will be looking for any signs of it to come.

they have an event coming on june 2nd that'll probably be a lot about software. but we hope to hear about something soon. the stock really needs it. >> if not a watch, ben, what would be truly impressive in your view? what could they possibly say even if it's just the promise of something later in the year that you think would reignite some excitement? >> well, it is tough. their secrecy is double-edged sword. it does create this surprise, especially when there's a new platform. like there was a couple of years ago. but right now, we have to trust them and wait, and that is frustrating some folks, because we haven't seen anything that new since the ipad. and obviously, every day, you hear something from google where they're trying something, dabbling in stuff. that's not apple's style. we would like to see something around web services and payments over time, where we feel that apple's valuation desperately needs more of an annuity feel to it and a feel that they're building something that has a

longer tail. see, the handset market is really tough. the margins could go down in a hea heartbeat. >> you mentioned payments. there's been recent speculation apple may have looked at acquiring square. would that be something to move the needle, in your opinion? >> well, they don't necessarily need to buy square. they could do some of the technology themselves. if they were able to monetize the user base within itunes in a way that investors are not thinking about, that could be a positive surprise. i think they're going to do some of that, but not all of that over the next six months. i think that they'll do some stuff that's very nice, that's incremental, that makes the iphone more -- have more utility, but i'd be surprised if it's something that changes the complete way we value the company. >> you talk about capital allocation. you point out that these giants when they do start to pay a dividend, they up the buyback, that temds not to move the needle much either. >> the biggest concern with the buyback is we should have heard

about it already. if you're waiting to announce it tonight, maybe it's packaged with some bad news. so there is a double-edged sword, again, to buybacks and dividends, because sometimes they're done to alleviate downside when you're no longer a growth company. so we have to balance that effectively, and it's an expectations game. i think over the long term, buybacks and dividends are the way to go for apple. obviously, if they package it with bad news tonight, you'll have to evaluate that in its entirety. so we'll have to see tonight how they package that. we do expect them to start buying back more stock. they probably bought about $15 billion in the quarter that just ended, and probably an accelerated pace for the next few quarters. that's widely expected, though. >> ben, you go so far as to compare apple's recent slump to microsoft between 2000 and 2010. that's a pretty dire comparison. i'm wondering what you think contributes to that. >> first of all, i want to clarify. we're talking about stocks, not the company or culture.

i certainly have my share of hate mail with this, and i apologize. we're stock analysts. we're not into a motion. it has nothing to do with the actual company's culture. what it means is, like, when you get to a certain size, a certain market cap, and you have to kind of defend your base, and you have to be careful about how you innovate, and whether -- what it does to support your current profit. which is the iphone. so everything apple does has to be more meticulous and careful. some of that does harken back to not only how the stock moved with microsoft going from the largest company in the world and retreating back, but then how some of its innovation cycles got longer and longer. i think from a stock standpoint, there is some comparison there. when you get really big. obviously, you hope that apple, you know, doesn't go into a funk. but it is harder and harder to move the needle. i know that ignited a lot of -- >> oh, yeah. >> -- emotion out there, and i

guess publicity is publicity for myself, but we're comparing socks and how they have to evolve. i think it is warranted. until we see some new innovation that really moves the needle and reaccelerates revenue. >> ben, we had you on when you went to equal weight, i believe february 20 when it closed at 525. of course, we're at 528 today. i think you can take that to the bank. >> we'll see. we think it's in a range. you know, and we'll see how it goes tonight. >> ben, thanks a lot. we'll see you later. >> thanks, carl. appreciate it. >> over at barclays. let's get to seema mody for a "market flash." >> check out facebook, the social networking giant has won antitrust approval to buy oculus. facebook said on march 25th it planned to buy it for $2 billion in its first-ever hardware deal. facebook trading down by 1.5%.

kayla? >> all right, thank you so much for that update, seema. we told you about the big news that hbo shows are coming to amazon prime. so what does this mean for shares of amazon and netflix? we'll tell you in a moment. also, the bells are just about to sound across europe. a few minutes left in that trading day, about three minutes. we'll have that close and its impact on the u.s. markets, so don't go away. up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. [ dog barks ] ♪

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with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

welcome back. check out soda stream. the stock spiking on a report that starbucks is in talks to buy a stake in the company, and triple the normal volume, the stock is trading higher by 12.5%. as for starbucks, trading down by .7%. kayla? >> yeah, we should also note that soda stream is headquartered in israel, so that's probably why that report is coming out there. we want to take you farther north and bring in simon hobbs, as we count you down to the close of europe. simon? >> negative territory in europe. we're coming off the biggest three-day rally since last summer, you should be aware of that. it's a broad-based move, based on industrial and financial stocks, the defensives doing well. what's important today is the weakened highlights, the structural problems, big underlying problems that europe has on two fronts. lack of inflation and secondly government finances that arguably are still way out of control. today, we had news that the euro

zone activity index is near a three-year high. within that, you have france looking fragile. input prices of ten-month low, output prices down for 25th month. in this environment, arguably great news of fixed income. as portugal returns to the bond market -- or to the public market and is able to sell debt today, actually at an eight-year low, perhaps you should get very jubilant about that further rallies on peripheral bond markets. but the bigger issue is the debt that these peripheral nations eye, the pinks, have racked up recently and continue to rack up. this is fresh data out today from eurostat, across the european union, 96% of gdp. there you see those with the greatest debt loads as a percentage of gdp. the problem is that the low yields that we have at the moment are not enough to bend the trajectory to a point that those debt yields are sustainable. i would put you back to the work that the financial times was

doing on imf figures earlier in the week where they were suggesting actually that the debt burden of the big five peripheral debtors will be in four years' time one-quarter of $1 trillion per year. in other words, over 10% of their revenue, arguably that is unsustainable. at the moment, nobody is worrying about the debt, everybody is piling in. as they put it, it's debilitating at its levels and could wake up to it further down the line. one more, association of british foods has been a phenomenal stock, up 48% over the last year. it has a cheap, casual chain, fashion chain called primark, hugely successful in the u.k., and today they said they'd launch it here in the united states. initially in boston, a slow rollout. you can see the stock is up some 8%. the british are coming. cheap and casual. >> very nice. >> thank you. >> you're never casual, except

for the shoes. live to the cme group in chicago and rick santelli. hey, rick. >> hi, carl. we've had some important housing information the last several days. today was new home sales. and we have some charts. a look at new home sales, 384,000 today, definitely a d a disappointing number. but going three, four, five years, there's been improvement. open the chart up to ten years, and you can clearly see that in 2005, we had just shy of 1.4 million new homes. okay? so what a difference. even though we've had a recovery in so many ways, we really haven't had the type of housing recovery that one would think we've had considering how much influence the federal reserve has put to keep yields down. let's look at existing home sales that came out yesterday. you would think that number sounds better. close to 4.6 million, right? at least it has " million" on it. open that chart up, and it was '05, about the same period that new-home sales were

1.39 million. they were at 7.25 million. 7.25 million. the point of this is, there's more going on here than low interest rates, okay? there's the affordability factor, we've heard. we heard professor robert shiller talk several times, he thought the momentum was d dispating. when it comes to housing, the analogy of what old parts like me paid, up 14%, 15%, it doesn't matter. the rate of change hasn't been devastating. yes, rates have moved up. the point is, things like affordability, demonstrate, and jobs, it isn't just about financing. by the way, that's the third wheel on this, the third leg of the stool, so to speak. it's hard to obtain financing. interest rates haven't been the issue. now, let's look at interest rates in the context of what everybody's been talking about. the six-day, maybe not seven-run of the equity indices and realize there's only one out of

the three indexes, the s&p, that's up on the year. the nasdaq's down. the dow's down. the s&p is currently sits at 1.5%. now, if we look at the 14 through today, you can see we've had the up sessions. the point is, we are up now 47 points, almost 50 points in the s&p. what has the five year done in that interim period? it's gone from basically 1.61 to 1.68, so up seven basis points. what's interesting is it stopped at 1.73, which is basically where it closed last year, the resistance. look at the ten year, knowing how much i talk about the flattening yield curve. it started out -- well, it started out at 2.64. it's up three basis points at 2.67, and the day isn't over. what's the moral to the story here? maybe the reason the yield is flattening is short rate are aggressively but the level of the offsides of the economic activity has reflected on the long end, just isn't anything to

write home about. simon, back to you. >> all right, i'll take it, rick. seema has a "market flash" for us at hq. this is an interesting story. >> it is, carl. check out gold trying to rebound off the two and a half month low. the metal hit its lowest level on tuesday after housing data beat expectations. but new home sales dived to an eight-month low this morning, right now gold shares trading at 1,284. as for gold miners, newmont mining, among others, all trading to the upside. kayla? >> all right. thank you so much for that. netflix shares dropping 4% after amazon announcing a new agreement with hbo. the latest blow in the content streaming wars. in the deal, amazon prime will be the exclusive instant video provider for some series like "six feet under." the shows will be available on hbo go, but the question we're asking this morning is how big of a blow is this for netflix and apple tv? joining us on the phone is

michael pacter. thank you for joining us, michael. >> it's a pleasure. >> the big question here, you cover both amazon and netflix, but i want to start with amazon, because john steinberg called it the perfect complement for amazon and hbo here. how would you describe it? >> oh, you know, that's a great question. it's certainly an expensive deal. i would guess it's somewhere between $200 and $400 million annually. it's a great boost to hbo. they're going to, you know, profit from a distribution channel that they really weren't pursuing prior. it's a big expenditure for amazon, which tells me they're deadly serious about competing with netflix. and it makes prime all the more valuable, because if you look at, you know, hbo's footprint, they have 35 or 39 million domestic households, but there are 65 million or so households

without hbo. it gives the households suddenly the opportunity to get a lot of great hbo content at a reasonable price with, oh, by the way, free shipping thrown in. >> so do you think that there is upside and significant upside at that for hbo to get more subscribers for hbo go, given that now some of the programs will be offered on fire tv, as well? >> you know, i think that -- again, the hbo go offering is just -- just makes hbo stickier. i think hbo has probably just concluded they're not going to grow a lot in the u.s., so they might as well as monetize three-year-old content. they're not offering up the movies, so you're not getting the warner or universal or fox movies through this deal. it's just hbo originals, which they own. >> right. >> and i think that as long as they become more ubiquitous with hbo go, it makes hbo more valuable. this is really all about money. they're getting paid by amazon for something that they weren't monetizing as effectively as they could, and it's keeping netflix from getting that content, so it gives amazon an edge if they decide to compete.

>> netflix has shown it has an appetite to do this. they inked a deal with showtime to get "dexter" on their platform. the stock is down 4%. how much of a missed opportunity was this for that company? >> you know, my estimate is that at the outset, this deal involves about 800 episodes of original programming. and netflix has about 100 on its network right now. i think ultimately this will be 2,000 episodes. so it's almost an insurmountable lead for amazon, and netflix is going to have to spend a ton -- i would say probably $1 billion to $2 billion if they want to develop this stuff themselves, and it will take years. there's not that much content out there, outside of hbo, available to license. so the price for guys like showtime is going up, and that's great. and you can bet that amazon will be in there bidding on that, as well. >> although, michael, amazon is no stranger to spending a ton on anything. you do seem to be favorable to amazon than netflix on the price

targets? >> yeah, ultimately, if you read the "bezos" book, this is zappos all over again. i think they're putting the hurt on netflix, and i think ultimately amazon would probably look at netflix as an acquisition target, but certainly not at $300. they'd be looking at under 200. so there's option value in netflix. amazon wants to be in this business, and they're deadly serious about it. >> and the fact that they couldn't get their hands on "game of thrones," that doesn't matter to you? >> oh, you know, that show hasn't been on three years. we're in season four. but give that another six months and they'll get their hands on a piece of that, as well. >> all right, michael pacter, thank you for joining us. >> my pleasure. up next, dunkin' donuts still planning a major california expansion, trying to open 1,000 stores over just the next few years. but after leaving the golden state in 2002, is dunkin' trying to expand too fast? we've got some answers coming up next. huh, 15 minutes could save you 15% or more

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♪ coming up at the top of the hour, stocks going for seven straight days of gains, but are we in a bubble? one billionaire investor says so. what do the traders say? apple's out with earnings after

the bell, and tim cook is under a microscope. we'll talk to one apple watcher who says it's time for the ceo to answer some tough questions. and dunkin' brands is out with earnings tomorrow, and two of our traders are fired up. one says it will be the biggest trade of the next quarter century. is he right or on a sugar high? it's straight ahead on "the half." carl, i'll see you in 15 or so. >> that is a long-term play on doughnuts. >> it is. so much for that "fast money" thing, right? >> it's good to have you back. scott wapner coming back in a few minutes. speaking of dunkin', they plan to open hundreds of stores across the country, but are they expanding too far, too fast? our jane wells is live in l.a. with some answers on that. hey, jane. >> hey, carl. that's what one analyst thinks as this tries to go after this here in california in this form. longbow research believes dunkin' could be cannibalizing sales at existing stores and that the rollout in california is, quote, running behind. dunkin' has big plans out west. it has three sort of one-off stores right now in california, including this one in camp

pendleton marine base. this morning, it announced agreements with franchisees to open 24 stores in california. the near-term goal is 150, long-term goal 1,000, after leaving california in 2002. longbow has an underperform on the shares. but andrew barrett is bullish and says they're establishing with well-funded franchisees. >> it's kind of overblown just to focus on california. there's a lot of other big markets, including texas and colorado and other places in the west that dunkin' is already opening a significant number of stores, seeing terrific new unit economics and average unit volumes, kind of paving the way as they move into california and we start to see a more significant number of unit openings. >> dunkin' is entering an extremely competitive market, and breakfast may be the most competitive part of the day now. starbucks is well established here.

and both companies report earnings tomorrow. dunkin' is expected to show 22% earnings growth. starbucks earnings expected to grow 9%. currently, you can only really get ground or whole bean dunkin' coffee right now in certain grocery stores in california. no doughnuts. not yet. next hour on "fast money," you heard scott talk about it, i'm going to talk about rising coffee prices and what it could mean. >> jane, a lot of analysts talk about how amazing it is they've been able to see the growth without being in california. i'm curious, in the last decade, have california residents' tastes changed so much you don't think they'd go back to dunkin'? >> well, they never really took to dunkin' in the first place, which is why they left. we'll have to see. certainly there's so many transplants out here who miss dunkin' donuts, and they will sort of feed, i think, the initial craze. that's why it does so well at camp pendleton marine base, because the marines come from everywhere. look, this is what people drink in california. this is a different product, and again, there will also be

breakfast sandwiches at dunkin', so people are well used to going in and seeing that. i think it will be the transplants who will get it started. it's sort of like in and out coming to new york. if in and out came to new york, you know, every californian on the east coast would drive to new york. >> yeah, you're underestimating how delicious in and out burgers are, jane. >> okay. well, see, i don't know dunkin' coffee. the only thing i don't like is getting my coffee premixed. i think that that bothers me. let me put the milk and sugar in. >> champagne tastes from jane wells over there. we know you'll be on the ground giving us reports as the expansion continues, so we appreciate it. >> sure. here's something we've been waiting for. a start-up that changes the way we get medical care. cutting wait times, making it more friendly. does it all really work as advertised? the ceo is here to make the case when "squawk on the street" comes back. don't miss becky quick's interview with warren buffett, coming up later today on cnbc. stick with us. ♪

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♪ welcome back. forget the wait times, limited doctor availability, one expanding health care start-up is looking to use technology to shake up the way patients receive medical care and make it more friendly. one medical group announced a new funding round of

$40 million, this on top of the $30 million haul in march. the round was led by google ventures. dr. tom lee is one medical founder and ceo, and he joins us now. dr. lee, thank you for joining us. >> great, thanks for having us. >> you have 27 clinics and raised $117 million. that's a pretty big expansion plan in just a short amount of time. how have you managed to pitch all these enterprise customers and consumers to actually come and use one medical? >> yeah, i mean, as we know, the health care system is extremely broken and we're looking to find a new model that works. we founded one in san francisco, and now that we've validated it, we're expanding into other markets. >> what new markets are you looking to get into? how far will $117 million go? i mean, you just raised $40 million last week, $30 million last month. how much does it cost to open one of the new clinics? >> reasonably affordably, actually. the main issue that we're looking at is the health care system nationally is broken, and we've now opened in six markets

across the country. but there is so much more demand for primary care, better health care services, higher quality and affordability at the same time. we have a lot of requests to open in other parts of the country. >> is this mostly an urban story, or can you do this -- how many locations could you diffuse across rural areas? >> we know the health care system is broken systemattically, so in small cities as well as large cities, doctors are looking to make this work. we'll start with urban markets to start. >> what do you think contributes to this recent change in traffic where a lot of consumers are more willing to go to some of the urgent care clinics versus their own doctors' offices or the hospital? >> i think we're looking at, let's call it a new wave of health care design and health care delivery, where new technologies can be introduced to make the model much more effective and efficient. we also look at a more patient-friendly model where

doctors want to practice in a high-touch environment where we care for patients again. >> you're joining us where we're getting earnings from health care drug manufacturers -- gilead today, controversies about the hep c drug. how will that fit in your model? >> when we look at health care system as a whole, it's very expensive. drugs are relatively a smaller expense. >> is that true? >> yeah. as a total percent of health care, health care labor costs are really the big one. and so, delivery costs and, let's call it hospital costs, are the big cost centers for us. when we look at innovation through quality and lower costs, you can do that through the delivery model much more effectively. the innovations are still promising. we'll see how that shakes out. >> what's the pitch to a doctor thinking about joining a traditional practice but you want to bring them into the one medical family instead? >> the main issue here is we allow the physician to practice the way medicine was originally

intended, so we give them a safer environment to practice higher quality medicine. more time with patients. access patients with e-mail and mobile services. what we find is we're attracting high-quality doctors, and for us, it's an issue of can we find the right fit for a model like ours where we can find the right doctors? >> when you meet a premed major, do you tell them you're crazy, change as soon as you can? >> you know, the thing about it we're much more optimistic now. we have med students and residents rotating through the system. and they're hopeful, right? all physicians want to practice high-quality medicine, and they're now seeing a delivery model that supports that thoughtfully, while also lowering the cost of care for the country. >> people will pay $199 for a credit card if the perks are right. but if you pay $199 to join one medical, that's the annual membership, what do you get? >> right. yeah, so what we do is we offer, let's call it, services not traditionally covered by health insurance, so a lot of virtual care. if you need to e-mail your

physician, have a video remote consultation, we allow that through the technology platform. what ends up happening, it's convenient for the patients, they can interact on a regular basis, and those are services not billed to insurance. so that ends up saving both the consumer's dollar as well as the insurer's dollar. >> tom, we'll have you back. we're interested in this story. congratulations on a big funding round last week. >> yeah, appreciate it. thank you so much. >> tom lee, the ceo of one medical group. when we come back, happy birthday to -- youtube. celebrating its ninth anniversary today. here's a quick pop quiz. what was the first ever video posted on the platform? we're going to show that to new a minute. ♪

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happy birthday to youtube, the site celebrating nine years of videos today, including the cat videos. the first one ever uploaded went up april 23rd, 2005, posted by one of the co-founders, titled "me at the zoo."

>> all right, so here we are in front of the elephants. the cool thing about these guys today is they have really, really, really long trunks, and that's cool. and that's pretty much all there is to say. >> wow. you can't take your eyes off of it. >> that's when you made up the phrase, there's a market for anything. >> yes. of course, google bought the company in 2006 for the then-staggering price of $1.65 billion. we love the factoid, kayla, you want to tell people? >> i didn't know this until the producers told us this, they're having a hard time finding janet jackson's malfunction. >> it has turned out to be a fantastic buy for google. people now talk about it as a $20 billion business down the road, and able to monetize now, doing national advertising over the past few weeks.

>> it's unbelievable. they have this proprietary technology where you can skip ads. that's something a lot of other technology companies have been seeking and really pining over, that youtube came up with. >> fascinating. meantime, markets not as fascinating today, scott. down about 16 points, but there's always the next hour. >> you never know what will happen. a lot of earnings in front of us, and important ones. we'll be over all of it. thank you so much. welcome. here's today's game plan -- bubble trouble? one investor has a big warning for investors of another looming tech wreck that could crush your money. is apple cooked? ahead of another earnings report, one man wonders whether the ceo, tim cook, is the wrong man for the job. you're going to hear from him live. face-lift or face plant? with facebook shares down 13% from the march highs, will the company's earnings in just four hours send the stocks surging or sinking? let's meet today's starting lineup, josh, pete, murph, anthony, here with us today. sheila is at the